Zodia Custody CEO Julian Sawyer said it’s time for the grown-ups to step up and take control of an industry plagued by regulatory crackdowns, scandals and banking meltdowns.
“There are more grey hairs and there should be more – there’s more experience coming into the industry,” Sawyer told DL News from his base in London.
He has cause to count himself in that category. Before he took on the top role at Standard Chartered and Northern Trust’s crypto asset custodian firm Zodia Custody, Sawyer clocked up two decades’ worth of experience with Accenture, EY and his own Bluerock Consulting.
He also served as Starling Bank’s first COO and Gemini’s European managing director.
Most recently, he zoomed through an 18-month stint as the CEO of the world’s fifth biggest cryptocurrency exchange Bitstamp before calling it quits in May last year, citing irreconcilable differences with the owners of the exchange.
“It became evident that both parties wanted to go in a different direction as to where we wanted to see the market and where we saw the opportunities out there,” Sawyer said, declining to provide more details.
Following his abrupt exodus from Bitstamp and a road trip along Route 66 with his son, Sawyer spent most of last year plotting his next move.
Eventually, a headhunter approached him about Zodia Custody. The previous chief, Maxime de Guillebon, had led the firm since its launch in 2020.
Sawyer said that while de Guillebon had “done all the hard work getting us live,” the board wanted someone new to scale the business and ensure its future.
The prospect of leading another scaleup business excited him, and he stepped into the role in November, just days after the collapse of FTX.
It’s been a rocky market since. Bitcoin and other digital currencies crashed, hedge fund Three Arrows Capital and Celsius were wiped out, and US regulators swarmed in with fines and bans.
The US Securities and Exchange Commission has been particularly industrious, slamming the likes of Kraken and Paxos with fresh enforcement actions.
Across the pond, Europe is set to vote on the Markets in Crypto-Assets, or MiCA, act in April.
To the lament of some crypto purists, the collapses of industry-friendly Silicon Valley Bank, Signature Bank and Silvergate Bank over the past two weeks have intensified calls for tougher policing.
“These failures also create another potential reputational problem for crypto; the association is another erosion of trust for both institutions and the wider public,” Sawyer said.
In response, crypto-friendly banks are likely to focus more on risk management, governance and greater due diligence, Sawyer said.
Contrary to this being a preamble to the cryptocalypse, Sawyer said it should just mean that the industry’s Wild West days are over.
“While we’re still in a crypto winter and volumes are down, people are actually saying that this is the future,” he said.
Sawyer said customers want the industry to prove how they comply with rules and that they are “not racing off with every new shiny toy that is out there.”
“The conversations the Zodia team had pre-FTX” were about coins,” he said. “‘What is your coin coverage?’”Conversations now with clients, he said, include questions about “lines of defence” or “What is your risk profile? How do we work with compliance?”
The company’s loss widened in 2021 to £12.25 million from £727,000 the year before, which Sawyer racks up to Zodia Custody still establishing itself.
“2023 is obviously going to be an investment year,” he said, saying the firm will focus on growing its commercial, product and marketing team.
Zodia Custody will also continue to grow its global footprint. It announced a deal with SBI Digital Asset Holdings to launch a joint venture in Japan, and Sawyer said the firm is now looking into how to expand “beyond the UK and EU.”
“The US is really interesting but we do not have regulatory certainty there at all,” he said. “The Middle East is really interesting, a really hot area in more ways than one in terms of what they can do and what they are wanting to do.”
Sawyer also said that Asia, Canada and Switzerland are interesting too, but he would not provide any more details about the company’s plans just yet.
“Custody is boring,” he said. “It’s not the most exciting part, but it should never be exciting, it shouldn’t be jazzy. If it is, then you’re doing it wrong.”